Shopper Loyalty to Whom? Chain Versus Outlet Loyalty in the Context of Store Acquisitions
Journal of Marketing Research, 51(3), 352-370, 2014
78 Pages Posted: 13 Feb 2018
Date Written: 2014
When patronizing stores, consumers may not only exhibit loyalty to a retail chain, but also to a specific outlet. This distinction is important in a dynamic retail environment: if a store changes ownership, chain loyalty makes customers inclined to seek out another outlet of the former chain, whereas outlet loyalty enhances their stay rate after the takeover. This paper distinguishes the two forms of loyalty conceptually, and discusses how both can be identified empirically, in a model of consumers’ reactions to store acquisitions. The authors estimate their model on unique scanner panel data covering ±200 local markets and takeovers. The results confirm that, after an acquisition, consumers exhibit outlet loyalty, irrespective of changes in chain and marketing mix. Counterfactual simulations point to important managerial implications. Acquiring outlets with a clientele in place leads to higher store traffic than could otherwise be reached by the new owner. Interestingly, these benefits cannot be reaped if the acquiring chain is a hard discounter, in which case customers’ previous store knowledge turns out to be less relevant, and incentives to seek out new outlets are higher.
Keywords: store acquisitions, state dependence, choice models, outlet loyalty, takeovers, store choice
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